Indian government decides to lift the ban on cotton exports

Indian Minister of Commerce and Industry Anand Sharma stated on the 11th that the government has decided to cancel the ban on cotton exports on the 5th of this month and will officially announce on the 12th.

India is the second largest cotton producer in the world, and China is the largest importer of Indian cotton. A week ago, the Ministry of Foreign Trade of India suddenly decided to ban cotton exports, saying that this was to ensure domestic cotton supply. However, India’s “Commercial Standards” newspaper quoted Indian industry analysts as saying that the sudden decision by the Indian government to ban cotton exports was linked to concerns that China’s recent imports of Indian cotton were large. According to a report quoted by Barclays Capital, China’s recent import of cotton from India has increased significantly. Especially in the second half of 2011 and early 2012, India has surpassed the United States as the largest source of Chinese cotton imports.

Since the ban on the export of cotton will lead to a drop in the purchase price of domestic cotton, the decision to issue it immediately faced strong opposition from Indian farmers and the cotton industry. India’s Agriculture Minister and officials in India’s main cotton-producing regions openly accused the ban, forcing Indian Prime Minister Manmohan Singh to demand a joint meeting of cabinet ministers to reconsider two days after the ban was introduced.

Bangladesh and China also pointed out that India’s cotton export ban does not comply with international trade norms. The Cotton Association of India ** Shess said, "The frequent changes in export policy will undermine India's reputation as a stable supplier of international markets, leading to disputes. We all hope that the policy will continue and be clear."